The proposed research has the following goals: 1) Develop and standardize a manual-based individual therapy for first-episode (FE) schizophrenia that is sensitive to the early stages of recovery from initial psychosis (i.e., the "Graduated Recovery Intervention Program;" GRIP); 2) Pilot test GRIP in a small-scale randomized controlled trial (RCT) to obtain specific intervention parameters, including effect sizes and attrition rates, as well as preliminary efficacy data; and 3) Collect preliminary data on intervention moderators and mediators. To achieve these goals, we will conduct the proposed research in three stages. During the first stage, we will refine and standardize the GRIP manual. In the second stage, we will conduct an open, uncontrolled pilot test of the intervention on 6 patients. Following the open trial, we will develop a final version of the GRIP manual. In the third phase of the research, we will conduct a small pilot randomized controlled trial of GRIP (n=25) versus supportive counseling (SC; n=25) for individuals with FE schizophrenia spectrum disorders (i.e., schizophrenia; schizoaffective disorder; schizophreniform disorder). Participants will be assessed at baseline, mid-treatment, post-treatment, and three-month follow-up on a variety of outcome measures, including social functioning, substance use, medication attitudes and adherence, rehospitalization, and symptoms.